Suited to a Fee

After selling its retail banking franchise to Citizens Financial Group last year, Mellon Financial Corp. has redirected its efforts around fee-based businesses such as custody, foreign exchange, benefits administration and back office outsourcing. Recent acquisitions, including Unifi, an HR consulting and outsourcing firm, and Eagle Investment Systems, an investment management software developer, highlight the new avenues taken by the $37.3 billion, Pittsburgh-based financial services company.

Leading Mellon's new strategy from the technology perspective is Janey Place, who was previously executive vice president for Bank of America's Strategic Technology Group. She had also been in charge of Wells Fargo's direct banking strategy from 1990 to 1994, and was chair of the Financial Services Technology Consortium in 1997 and 1998.

Place spoke with senior associate editor Ivan Schneider about Mellon Financial's e-commerce infrastructure and how its new acquisitions fit into the overall objectives of the company.

BS&T: How are you using e-commerce to further Mellon's business strategy?

PLACE: We could aggregate our businesses around a customer rather than have separate salespeople and separate business strategies. We built the enterprise e-commerce infrastructure as a way to get all of our businesses onto the same platform and to get them into a Web delivery channel. On my end, it's more the sales channel; in GSS Global Securities Services it's more of a customer-reporting channel, and of course with GCM Global Cash Management it's more of a product delivery channel.

BS&T: Are all of these groups using the same technologies now?

PLACE: Everyone's not precisely on the same technology. But we are on the same environment, and we are using the same technologies across our businesses to do things like reporting and content management. And of course we're using the same Web tools; we're an IBM WebSphere customer.

We used the strategy of getting them all onto the same platform to meet their very specific business needs. Once we've got them on the same platform, we can enable business strategies that are being developed even as we speak, which are much more organized around our customers.

BS&T: Can you get a single view of a customer from an organizational standpoint?

PLACE: We identified that question about six months into our project. When I realized that we really didn't have any person responsible for a single view of a customer and that we had customer data in a lot of different places, I hired somebody to begin pulling that together for us.

We do have a prototype that's in use on customer information management, and it can do things like pull most information about a customer-we have financials, we have some outside data, we have all of the Mellon relationships.

BS&T: What e-commerce capabilities do CFOs require now from their banks?

PLACE: For so many of our products, the CFO is either the person we're calling on, or the person we're calling on works for the CFO. That's true for treasury services, for HR and pension services. We are a large HR consultant and outsourcer, and frequently HR reports to the CFO. We have investor services, and that usually reports to the CFO. We just find much more involvement on behalf of the CFO.

BS&T: How does the Unifi acquisition help Mellon serve CFOs?

PLACE: It helps tremendously-some of the big decisions that CFOs are making or getting involved with have to do with outsourcing. What Unifi offers is either the benefits part of outsourcing administration, or-and here we go head to head with Exult Irvine, Calif.-total HR outsourcing.

Exult just won a $700 million contract with Prudential Financial for total HR outsourcing. It's a 10-year contract for $700 million, so you can see the potential size of this market. Very long-term contracts, in a very, very large outsourced servicing business.

BS&T: What does Eagle Investment Systems bring to Mellon?

PLACE: That was a very strategic acquisition for us. The securities services business is really a scale business, and how you make money in a scale business is through efficiency, and that usually means technology. Except for the very large asset manager, or even sometimes the very large asset managers-they're looking to outsource securities servicing. It's all part of the asset management business-it's the record keeping, it's the reporting, it's the tax calculations, it's the mailing of quarterly reports, it's really the back office.

We looked at a lot of technologies, and were very, very impressed with Eagle. They are really going to be the fundamental platform of the GSS outsourced business.